Geary v Rankine

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeLord Justice Lewison,Lord Justice Etherton,Lord Justice Thorpe
Judgment Date29 Mar 2012
Neutral Citation[2012] EWCA Civ 555
Docket NumberCase No: B2/2011/0428

[2012] EWCA Civ 555

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM HASTINGS COUNTY COURT

HIS HONOUR JUDGE HOLLIS

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

Lord Justice Thorpe

Lord Justice Etherton

and

Lord Justice Lewison

Case No: B2/2011/0428

Between:
Geary
Appellant
and
Rankine
Respondent

Mr Donald Broatch (instructed by Holden and Co Solicitors) appeared on behalf of the Appellant.

The Respondent appeared in person.

(As Approved)

Lord Justice Lewison
1

Between 1990 and May 2009 Mrs Geary and Mr Rankine were in a relationship. When it began Mrs Geary was still married, and she was not divorced until 2002. At the beginning they lived in London. Mrs Geary and Mr Rankine had a son, Aran, who was born in 1992. When they first met Mr Rankine ran a removal business and subsequently opened a second-hand furniture shop as well. Mrs Geary did all the office work. Mr Rankine had been working in the print industry, and when he was made redundant some time before the relationship began he had received a redundancy payment.

2

In 1996 Mr Rankine acquired a guesthouse called Castle View at 7 Devonshire Road, Hastings. It was bought for £61,000. The purchase was a cash purchase with no mortgage and Mr Rankine provided all the cash out of his savings. At the time of the purchase it was not intended that they should live in the property. Nor at that time was it intended that either of them would run the guest house business. Rather, Mr Rankine purchased it as a commercial investment and the business was to be run by a manager. The judge accepted Mr Rankine's evidence that at the time the intention was that they would continue to live in London and that he would arrange for someone to manage the business in Hastings. However, there were difficulties with the manager which manifested themselves quite quickly and Mr Rankine himself moved down from London to try and run the business himself. Mrs Geary remained in London working as a receptionist. After a further short time Mr Rankine found that he could not cope either, so Mrs Geary moved down to Hastings, but they still retained their London home in case they decided to move back.

3

Once Mrs Geary was settled in Hastings she became involved in the business. The judge found that she helped with the clearing, she helped when there were students there, she prepared three meals a day and she dealt with some of the paper work and bank work, assisting Mr Rankine, who was not good either with documents or figures.

4

The judge did not consider that either Mrs Geary or Mr Rankine was a reliable witness, and he said they were both untruthful on occasions. Contrary to Mrs Geary's evidence, the judge found that the bank accounts were in Mr Rankine's name and there was no joint account. Also contrary to her evidence, he found that the initial purchase was, as I have described, an investment on Mr Rankine's behalf to be run by a manager. Contrary to Mr Rankine's evidence, he found that Mrs Geary played a rather greater role in the running of the guest house than he was prepared to accept.

5

In her witness statement dated 6 October 2009 Mrs Geary said, amongst other things:

"If I needed money he [i.e. Mr Rankine] would give it to me. He would only give me housekeeping or spending money if I asked for it. He was very controlling."

She also said:

"I have previously been married when I met him but I have never bothered to get a divorce. The Defendant told me that unless I formally divorced my former husband he would not recognise me, or leave me anything in his will."

6

Mr Rankine gave evidence on the latter point to much the same effect. He said in his witness statement dated 7 April 2010:

"Lastly, it should be noted that Barbara remained married to her husband until 2002 or later. That being so, there was no way that I would make her a partner in the business. If I had I would have assumed that that could have enabled her former husband to make a claim against my money and might result in provision for him and the children they had had rather than for Aran."

7

In her second witness statement Mrs Geary said:

"During the time that I lived and worked with the Respondent I was not paid a wage. If I needed money for shopping or cigarettes I asked the Respondent for it and he would give me money. Throughout our relationship the Respondent was mean with money and reluctant to allow me to spend […] If I asked the Respondent for money to spend on myself other than small amounts, there would always be an argument and he would become angry so I eventually did not ask."

8

She added in that witness statement:

"As the years went by, I kept asking him what security he was going to provide for me and my son should anything happen to him. He would say it was best that the business stayed in his name only because if it failed and he was made bankrupt then I could continue the business afresh in my sole name. In later years, he would give no answer or make a non committal response."

9

The material before the judge also included the accounts prepared for the business for each of the years between 2005 and 2009. These accounts were prepared in the name of A J Rankine trading as Castle View Guest House. Each of the balance sheets accompanying the profits and loss accounts showed drawings by Mr Rankine of between £4,000 and £20,000. The accounts showed no drawings by Mrs Geary. The profit and loss accounts also showed a deduction for wages which, according to Mr Rankine on his pleaded case, included payment of wages to Mrs Geary. Mrs Geary's evidence was that it was she who dealt with the accountants and attended meetings when "he discussed the business and taxation issues with the accountant".

10

Mrs Geary put her claim in two ways. First, she said that she had acquired a beneficial interest in Castle View. Second, she said that she and Mr Rankine had been partners in the guest house business. The statement of case in support of the partnership claim did not specifically allege that the freehold property was a partnership asset, but, as the judge observed, unless it was, any account would only produce a loss for her.

11

HHJ Hollis rejected both ways in which Mrs Geary put her claim. Mr Broatch, appearing on this appeal for Mrs Geary, concentrated most of his skeleton argument on the partnership claim. He rightly submitted that a family or quasi-family relationship was not necessarily incompatible with the relationship of business partners. He also correctly submitted that a partnership can be founded on an agreement inferred from conduct. Mr Broatch's principal criticism of the judge was that he was guilty of what Mr Broatch called "reverse order reasoning"; that is to say he reached a conclusion before articulating the reasons which led him to the conclusion that he had already arrived at. It is therefore necessary to look at some of the objective evidence before the judge.

12

Mrs Geary worked in the business to a greater extent than Mr Rankine was prepared to admit. She was not paid a wage and the judge found that she was not an employee. This is a pointer towards the conclusion that there was a partnership. However, there were many pointers towards the opposite conclusion. First, the accounts, in the preparation of which Mrs Geary participated, were drawn on the basis that Mr Rankine was a sole trader. A letter from the accountants confirms that since their appointment they had acted for Mr Rankine in his capacity as a sole trader. Second, the accounts showed no evidence of any sharing of profits. Mr Broatch said that Mrs Geary and Mr Rankine, as he put it, lived on the business, but in my judgment that does not begin to show a sharing of the profits. The drawings were all made by Mr Rankine. Indeed, during the course of Mr Rankine's cross-examination it was put to him by counsel then appearing for Mrs Geary that "the net profit for the year—it would have gone to you, would it not?", to which Mr Rankine answered "Yes". Thus the case put to Mr Rankine positively asserted that there was no sharing of profits. Third, there was no evidence that Mrs Geary was held out as a partner to the outside world. Fourth, as the judge found, there was no joint bank account. Fifth, as the judge found, they separated for a period of many months and during that time the business carried on. If there had been a partnership it would have been a partnership of will, with the result that when Mrs Geary left the business that partnership would in any event have dissolved.

13

In addition, there is the evidence of Mrs Geary herself. I have quoted some of it. Her evidence was that Mr Rankine only gave her money when she asked for it but he was very controlling. If she asked for money to spend on herself, other than small...

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